UK June Services PMI Falls to 48.7, Contracting at Fastest Pace Since January 2023
Claire Weston
The UK's June flash services PMI fell to 48.7, a near three-and-a-half-year low that undershot every forecast; with the PM's resignation adding to economic headwinds, the second half hinges on whether services can stabilize.
How bad is the services reading?
June services PMI slid from 49.3 to 48.7, below every forecast in the Reuters poll (median estimate 50.1).
This means → even the most bearish analyst was too optimistic. Services are contracting at the fastest pace since January 2023.
New business fell to its lowest since January 2021; job losses widened in tandem — demand and hiring are deteriorating together.
What are businesses worried about?
S&P Global chief business economist Chris Williamson said high costs and weak growth expectations are driving employment down "at a worrying pace."
He added that domestic political instability has unsettled some firms.
In plain terms = businesses face a triple squeeze: costs won't fall, orders won't grow, and politics keeps adding noise.
Can manufacturing pick up the slack?
Manufacturing PMI eased from 53.9 to 53.1, a three-month low — but still in expansion territory (above 50 signals growth).
The composite PMI slipped from 49.7 to 49.4, the lowest since April 2025 — the overall private sector remains in contraction.
This means → manufacturing hasn't fallen below the waterline, but it can't carry the whole economy alone.
What does this mean for Q2 GDP?
Official data already showed a 0.1% month-on-month GDP decline in May; S&P Global expects a similar result for June.
In plain terms = after a strong Q1, Q2 GDP is tracking roughly flat — momentum has clearly faded.
This reflects an economy whose recovery is fragile, stalling at the first headwind.
Is there any relief on costs?
The energy shock from the Middle East conflict has eased. Oil has pulled back from a conflict-peak above $120/barrel to below $80.
Yet prices remain roughly $10/barrel above pre-conflict levels; S&P Global warns overall cost pressures are still relatively elevated.
This means → costs are *easing*, not *resolved* — firms have breathing room, but not comfort.
How does the political shake-up affect the outlook?
The PMI data landed one day after PM Keir Starmer announced his resignation; former Greater Manchester mayor Andy Burnham is seen as the most likely successor.
The next PM inherits three core challenges: stagnant growth, stickier inflation than other major advanced economies, and tight public finances.
In plain terms = whether services can hold steady through the political transition is the key test for the UK economy's second-half trajectory.
Content is for reference only, not financial advice.